Budget earmarks $60-million for accelerators, incubators

Federal Budget 2013: Accelerators, incubators get $60-million

The Conservative government’s 2013 budget has proposed $60-million in federal funding over a span of five years to help improve “outstanding and high-potential incubator and accelerator organizations in Canada.”

Incubators and accelerators can be found across Canada, the U.S. and worldwide, and expose early-stage startups to industry mentors and investors who provide valuable advice and resources related to business development, growth and follow-on financing.

The additional funding will augment Prime Minister Stephen Harper’s existing Venture Capital Action Plan – a $400-million strategy earmarked in last year’s budget and further detailed in January – for the support of private sector investment in early-stage companies.

Additional details will be revealed in the coming months.

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“Financing these accelerators has not always been easy and has mostly depended on venture capital firms providing investment dollars,” said Vancouver-based angel investor Boris Wertz, founder of Version One Ventures, in an email.

“The $60-million budgeted for by the government might be very useful to broaden the financing base of those accelerators and help them increase their impact.”

According to the government’s Venture Capital Action Plan, up to $50-million will also be invested in three to five existing Canadian venture capital funds over the next seven to 10 years.

When spread over five years and across multiple accelerators and incubators nationwide, $60-million in funding may not seem like much – but Extreme Startups managing director Sunil Sharma isn’t worried.

“If the interest is in lean private accelerators, the capital requirements can actually be quite light,” he explained, referring to the relatively small overhead and administrative costs that go hand-in-hand with some of Canada’s more successful programs.

Both Mr. Wertz and Mr. Sharma consider Montreal’s FounderFuel, Sharma’s own Toronto-based ExtremeStartups, Hyperdrive in Waterloo and GrowLab in Vancouver – of which Mr. Wertz is also the founder – to be among the country’s highest profile accelerators and incubators, as is desired by the government’s $60-million fund.

“I hope it’s a commitment to private, venture backed accelerators, which I think are illustrating enormous potential at identifying early-stage startups that are then attracting followup investments,” Mr. Sharma said.

Finance Minister Jim Flaherty also confirmed Thursday the government will give the the Canadian Youth Business Foundation $18-million over two years to help young entrepreneurs, foster innovation and tackle youth unemployment.